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Equities Policy Needs Surgery, Not Band-Aids

Volatility, flash-crash risks and bigger dark pools are the legacy of the SEC’s Regulation NMS.

By

Paul Atkins

Jan. 14, 2016 6:12 p.m. ET

IEX, the self-declared anti-high-frequency trading venue praised in Michael Lewis’s 2014 book, “Flash Boys,” has filed an application with the Securities and Exchange Commission to change from a “dark pool” to a full-fledged stock exchange. Good news, one might think. But in so doing, IEX has exposed the regulatory quagmire harming the U.S. securities markets.

To create a “fairer” exchange, IEX has introduced a speed-bump feature: a 350-microsecond delay before member orders can access price quotes, and another 350-microsecond...